NYC Bosses Plead Guilty to Benefit Plan Kickbacks and Fraud

Benefit plans have become a preferred road to riches for many corrupt union leaders. Sometimes that road ends with a conviction. Last month, two New York City union leaders – Louis Smith and Johnnie Miranti – pleaded guilty in U.S. District Court for the Southern District of New York for their roles in a decade-long scheme to skim two union health plans out of hundreds of thousands and likely over a million dollars. Smith, ex-president of International Brotherhood of Teamsters Local 810, pleaded guilty on August 5 to soliciting and receiving kickbacks totaling $151,481. Three days later, Miranti, an officer with Allied Novelty and Production Workers Local 223, pleaded guilty to receiving $138,500. The pair, along with Miranti’s father, Rocco Miranti, had been indicted in July 2015 following a joint probe by the FBI, the U.S. Labor Department and the NYPD.

Union Corruption Update covered this case last August. According to federal prosecutors, the three defendants, each a trustee of their respective union health care fund, for more than a decade had extracted monthly kickback payments from a cooperating witness, a third-party administrator identified as the CEO of “Business-1,” in exchange for setting up union accounts. The hustle began in or around 2004. At first, only Rocco Miranti, now 71, a resident of Howard Beach (Queens), N.Y., profited. But about a year later, he arranged for Business-1 also to become a third-party administrator for Teamsters Local 810, the union of which Smith, now 74, a resident of Rockland County, N.Y., was president. In or around 2006, the arrangement changed. Miranti and Smith raised the “toll” from about 5 percent of payable fees to 10 percent. Eventually, Miranti’s son, Johnnie, now 40, a resident of Rockville Center (Long Island), N.Y., got in on the scam, which included embezzlement as well as kickbacks.

The arrangement was lucrative, producing more than $500,000 in extra income from each benefit plan of Novelty Workers Local 223 and Teamsters Local 810. Local 223 in particular suffered. By the close of 2009, its health fund was nearly $480,000 in the red. Indeed, during 2007-09, the Department of Labor listed the plan’s status as “critical”; that is, its assets were less than 65 percent of estimated long-term liabilities. The scheme unraveled beginning in October 2014, when the feds, acting on a tip from the CEO of Business-1, secretly recorded conversations between the Mirantis and Smith. At some of the meetings, the witness provided under-the-table funds to keep the contracts in force. Prosecutors now able to build a case, grand jury indictments weren’t far behind. And they came the following July 1. The Mirantis and Louis Smith each were charged with three counts of conspiracy. With Louis Smith and Johnnie Miranti copping a plea last month, it’s a fair bet that Rocco Miranti will do likewise soon.